International Energy Outlook 2011 - EIA

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U.S. Energy Information Administration | International Energy Outlook 2011 World energy demand and economic outlook As a result, the country’s export potential in 2011 was compromised and GDP growth potential was dampened significantly [28]. Australia is expected to return to GDP growth of about 2.5 percent in 2011, before accelerating again in 2012 and beyond [29]. Non-OECD economies Overall economic growth in the non-OECD region averages 4.6 percent per year from 2008 to 2035 in the IEO2011 Reference case (Figure 26), and growth in non-OECD Europe and Eurasia as a whole averages 2.7 percent per year. After several years of strong regional growth (the region’s GDP grew by an average of 6.7 percent per year from 2000 to 2008), GDP in non-OECD Europe and Eurasia contracted by 7.3 percent in 2009. The region has a fairly diverse set of economies, and while some economies suffered deep recessions in 2008-2009, others saw economic growth slow but remain positive. For the nations of non-OECD Europe and Eurasia, exports have led to increased growth in 2010, with household consumption showing signs of recovery in 2011. In the face of large fiscal deficits, government expenditures have been under pressure in many nations of the region, and fiscal austerity measures are expected to restrain the pace of economic growth in the region into the medium term. Monetary policy also will have to be relatively cautious, given that higher prices for key imported commodities and food and a return of upward pressure from wages could increase the risk of building inflationary expectations. Beginning in late 2008, it became more difficult for banks and other entities in non-OECD Europe and Eurasia—particularly, Russia, Kazakhstan, and Ukraine—to gain access to foreign loans [30]. The impact was softened somewhat by higher world market prices for commodity exports, but with the subsequent collapse of commodity prices and worsening global economic situation, the region’s economic growth declined sharply. In the mid- to long term, a return to high world oil prices is expected to stimulate investment outlays, especially in the energy sector of the Caspian region. Given the volatility of energy market prices, however, it is unlikely that the economies of non-OECD Europe and Eurasia will be able to sustain their recent growth rates until they have achieved more broad-based diversification from energy production and exports. Much of the growth in world economic activity between 2008 and 2035 occurs among the nations of non-OECD Asia, where regional GDP growth averages 5.3 percent per year. China, non-OECD Asia’s largest economy, continues to play a major role in both the supply and demand sides of the global economy. IEO2011 projects an average annual growth rate of approximately 5.7 percent for China’s economy from 2008 to 2035—the highest among all the world’s economies. Non-OECD Asia has led the recovery from the 2008-2009 global economic recession. In China, substantial stimulus and tax breaks in 2009, along with considerable loosening of lending terms, allowed GDP growth to reach 9.1 percent, even with considerable deceleration of exports. Further, growth in property sales and real estate prices was substantial in 2010, supporting renewed strength in construction activity. In fact, there is growing concern on the part of the Chinese government about a possible housing bubble. In an effort to control rapidly increasing prices in the country’s real estate market, the government imposed restrictions on property acquisitions in more than 30 Chinese cities, making it more difficult for nonresidents to buy homes and for current homeowners to purchase second residences [31]. The growth of domestic demand in China is supported by an increase in credit expansion, despite the repeated tightening moves by the People’s Bank of China—particularly in raising the reserve requirement ratio. Many non-OECD Asian economies that are trade partners with China also have benefited from their economic ties. Although those emerging Asian economies—particularly Figure 26. Non-OECD gross domestic product growth rates by country grouping, 2008-2035 (average annual percent change) China India Brazil Other Asia Middle East Africa Other Central/ South America Other Europe/ Eurasia Russia Total Non-OECD Sources: IHS Global Insight and EIA. 2.7% 2.6% 3.0% 3.8% 3.7% 4.6% 4.5% 4.6% 5.7% 5.5% 0 2 4 6 those strongly dependent on exports for revenues— experienced profound decreases in economic activity in 2008 and into 2009 as demand for goods among OECD economies declined sharply, the recovery in China has bolstered their recovery. Structural issues that have implications for economic growth in China in the mid- to long term include the pace of reform affecting inefficient state-owned companies and a banking system that is carrying a significant amount of nonperforming loans. In large part, China’s economic base has changed from agriculture and heavy industry to light manufacturing and services. In the late 1970s, the agriculture sector employed nearly 70 percent of China’s labor and produced around 30 percent of its GDP; currently, the agriculture sector’s employment and output shares are 43 percent and 12 percent, respectively [32]. By shifting its factors of production away from the low-productivity agricultural sector, China has boosted productivity significantly, adding to long-run prospects for growth. As China shifts from labor-intensive to more capital-intensive means of production, availability of capital becomes crucial. Development of domestic capital 19
World energy demand markets continues in the IEO2011 Reference case, providing macroeconomic stability and ensuring that China’s large domestic savings are used more efficiently. India’s GDP growth averages 5.5 percent per year from 2008 to 2035 in the IEO2011 Reference case. India was affected far less by the global economic downturn than were many other nations of the world, with low dependence on exports, accommodating economic policies, and robust capital inflows supporting domestic activity [33]. India’s GDP grew by 6.8 percent in 2009 and 8.3 percent in 2010 [34]. In the short term, concerns about sharply rising inflation—primarily because of increasing food and energy costs—are expected to result in increased tightening of monetary supply by the Reserve Bank of India. In the medium term, favorable export growth, continued economic reforms, and greater contributions from the service and construction sectors are expected to keep the economy advancing at rates near 7.0 percent through 2020. Accelerating structural reforms—including ending regulatory impediments to the consolidation of labor-intensive industries, labor market and bankruptcy reforms, and agricultural and trade liberalization—remain essential for stimulating potential growth and reducing poverty in India over the mid- to long term. Outside China and India, recovery from the global recession in the countries of non-OECD Asia has varied. Those economies that are export-dependent (including Hong Kong, Indonesia, Singapore, and Taiwan) strengthened substantially in 2010, as demand in China supported their recovery. For nations where domestic demand has remained relatively healthy (including Vietnam and the Philippines), the impact of the global recession was less severe, but the recovery into the medium term may be more muted than in the years before the recession, because weaker demand in key export markets—notably, the United States and Europe—may dampen the potential to increase trade for some years into the future [35]. Overall, long-term economic activity in the nations of non-OECD Asia remains positive. From 2008 to 2035, national economic growth rates for the region—excluding China and India— average 4.5 percent per year in the Reference case. In the Middle East, oil exports account for a substantial portion of GDP growth for the region’s key economies. A sharp decline in world oil prices from their peak in mid-July 2008 had a significant impact on the region in 2009. Since then, oil prices have continued to rise—in part because of the recovering demand for liquids but also as a result of the political unrest that began with protests in the African countries of Tunisia and Egypt and then spread to Libya and to the Middle Eastern countries Bahrain, Yemen, Iran, and Syria. In the short term, it is difficult to balance the positive impact of rising revenues from oil exports in the Middle East against growing instability and political uncertainty [36]. Extremely high unemployment rates (particularly among the region’s substantial younger populations), combined with concerns over rising food prices, sparked the domestic unrest. Political turmoil and domestic unrest threaten to depress consumer confidence, and looking forward inflationary risks could be a key factor affecting sentiment and consumer demand. The Middle East’s reliance on oil and natural gas revenues continues throughout the projection period. In the long run, rising oil prices and rebounding demand for the region’s export commodities support favorable prospects for economic growth. The impact of the global recession on the economies of Africa varied across the continent. Most countries in sub-Saharan Africa have recovered quickly from the global crisis, with the oil-exporting countries, in particular, benefiting from increasing oil prices. Africa continues to gain major debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. Despite the overhang of the global economic recession in 2010, four African countries reached key HIPC milestones, thus gaining access to more than $18.8 billion in debt relief [37]. Risks include continued uncertainty in the global financial markets and low growth in the more developed African countries. If financial flows from the leading economies in sub-Saharan Africa fall significantly because of fiscal retrenchment or risk aversion, the net effect will be a dampening of growth prospects in the region. Recent social and political unrest in Tunisia, Egypt, Algeria, and especially Libya—where on March 19, 2011, an alliance of nations began efforts backed by the United Nations to establish a no-fly zone to ensure the safety of Libyan citizens—has added considerable uncertainty to prospects for northern Africa, especially in the near term [38]. It remains to be seen how events will unfold and how they will the affect the region’s economic development in the mid- to long term. In the IEO2011 Reference case, Africa’s combined economy grows at an average annual rate of 3.7 percent from 2008 to 2035, supported by the expansion of exports and robust domestic demand in many of the continent’s national economies. Nevertheless, both economic and political factors—such as low savings and investment rates, lack of strong economic and political institutions, limited quantity and quality of infrastructure and human capital, negative perceptions on the part of international investors, protracted civil unrest and political disturbances, and chronic widespread disease—present formidable obstacles to growth in a number of African countries. In Central and South America, the impact of the global economic downturn varied across the nations of the region. Brazil, Colombia, Peru, and Uruguay all have experienced strong recoveries, but sustainable recoveries in Ecuador and Venezuela remain in question [39]. Further, economies with strong trade ties to Brazil—notably, Argentina and Paraguay—are likely to benefit from that relationship. Brazil—the region’s largest economy—experienced a relatively short and mild recession, and its recovery was much stronger than expected by the government [40]. As a result, authorities have been more concerned about an economy that is expanding too quickly, raising fears that fast-paced increases in demand growth will not be met by increased output and thus will lead to rising prices and high inflation. As the global recession deepened, the Central Bank of Brazil trimmed interest rates to a record low of 8.75 percent in July 2009; however, Brazil was among the first nations to begin increasing interest rates, starting in April 2010, to 11.25 percent in January 2011 as the Bank tried to slow the pace of economic expansion [41]. Brazil’s continued favorable economic prospects are supported by domestic and foreign investment, along with strengthening domestic consumption. 20 U.S. Energy Information Administration | International Energy Outlook 2011
Page 2 and 3: Contacts The International Energy O
Page 4 and 5: U.S. Energy Information Administrat
Page 6 and 7: Contents Highlights ...............
Page 8 and 9: Figures (continued) U.S. Energy Inf
Page 10 and 11: Highlights In the IEO2011 Reference
Page 16 and 17: levels of income and fossil fuel us
Page 18 and 19: Chapter 1 World energy demand and e
Page 34 and 35: Chapter 2 Liquid fuels Overview Con
Page 52 and 53: Chapter 3 Natural gas Overview In t
Page 74 and 75: References for natural gas Links cu
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Chapter 4 Coal Overview In the IEO2
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decline substantially over the proj
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demand for steel in both domestic a
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Table 9. World coal flows by import
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Europe, Middle East, and Africa In
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process could impede or delay those
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References for coal Links current a
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Mechel OAO Commences Construction o
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Chapter 5 Electricity Overview In t
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U.S. Energy Information Administrat
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Chapter 6 Industrial sector energy
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References for industrial sector en
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Chapter 7 Transportation sector ene
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Chapter 8 Energy-related carbon dio
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Table 18. Average annual changes in
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Data Sources Links current as of Ju
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Appendix A Reference case projectio
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Table A1. World total primary energ
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Table A2. World total energy consum
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Table A4. World gross domestic prod
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Table A6. World natural gas consump
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Table A8. World nuclear energy cons
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Table A10. World carbon dioxide emi
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Table A12. World carbon dioxide emi
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Table A14. World population by regi
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Appendix B High Oil Price case proj
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Table B1. World total primary energ
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Table B4. World liquids consumption
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Table B6. World coal consumption by
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Table B8. World consumption of hydr
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Table B12. World carbon dioxide emi
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Appendix C Low Oil Price case proje
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Table C1. World total primary energ
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Table C4. World liquids consumption
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Table C6. World coal consumption by
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Table C8. World consumption of hydr
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Table C12. World carbon dioxide emi
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Appendix D Reference case projectio
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Reference case projections by end-u
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Appendix E Projections of liquid fu
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Projections of liquid fuels and oth
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Table E11. World conventional liqui
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Table E14. World conventional liqui
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Appendix F Reference case projectio
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Reference case projections for elec
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Appendix G Reference case projectio
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Table G1. World total natural gas p
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Table G3. World other natural gas p
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Appendix H Kaya Identity factor pro
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Table H1. World population by regio
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Table H3. World energy intensity by
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Appendix I Comparisons with Interna
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Comparisons with International Ener
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Appendix J Models used to generate
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Appendix K Regional definitions The
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